Brussels summit: This is a diplomatic victory for David Cameron – nothing more

Dave says no – that's the news this morning. Faced in Brussels with Greece's funding crisis, the PM has managed to stop Britain being drawn further into the web of bailouts, and so when Greece does eventually go bust, we will be less exposed than our European partners, France and Germany. Of course we will still be exposed – through the £19bn we contribute to IMF readies and through the £8bn or so our banks are exposed to – but this is still a victory for Mr Cameron. If Britain had been bullied into providing funds for yet another bailout, the PM would have faced a revolt from the Eurosceptic wings of his backbenches. Just yesterday, 14 Tory MPs wrote to the FT (£) to express their concern about Britain's "throwing good money after bad". They will now be slightly reassured.

But while this helps out Mr Cameron, it is largely insignificant. Britain's direct exposure to Greece's catastrophe was never enormous. The most we can lose is a few billion – not pocket change, but well within the margin of error for government spending. What really matters is not the bailout, but what comes after it. Greece must eventually default. Ideally, it must somehow leave the euro too, or else after defaulting it will merely start accumulating debt once again. But unfortunately, neither of those two things can be done easily. As I wrote on Monday, leaving the euro would be very likely to cause a European-wide financial crisis. Even within the euro, an unmanaged default, if it knocked creditors' confidence in Portugal, Ireland and Spain, would be equally destructive.

European leaders are no closer to working out how to solve that problem than they were a year ago, when Greece's insolvency first became clear. But neither are they willing to consider the alternative solution – which is that the German taxpayer pays the bill. If they do not find a solution, we will suffer a new financial crisis as devastating as the one that began in Austria in 1931. And that, more than whether or not Britain is contributing to a bailout, is what should be concerning David Cameron.